Problem
Read the Case Incident 1, The Demotivation of CEO Pay, on p. 236-237
i. What do you think is the ideal ratio? Why might the ideal vary from country to country?
ii. How does the executive compensation issue relate to equity theory? In what ways does equity theory explain the results in the case and in what ways is equity theory a poor fit.
iii. The study found that participants thought performance should be essential or very important in deciding pay. What might be the positive motivation consequences for average employees if CEO pay is tied to performance?
iv. Your book describes various aspects of perceptions of fairness and their influence on motivation. Use those terms to explain the findings in this case.
v. How do employees' reactions to incentives differ based on values associated with national culture?
References
Newman, J. M., & Gerhart, B. (2020). Compensation, thirteenth edition. The McGraw-Hill Companies, Inc.